WEBVTT - Cisco Posts Weak Sales Forecast, Alibaba Stops Cloud Unit Spinoff 0:00:01.720 --> 0:00:06.960 From Bahart where Innovation, money and power Collie in Silicon Valley, Nbon. 0:00:07.360 --> 0:00:11.360 This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. 0:00:24.560 --> 0:00:27.520 I'm Caroline Heinder Bloomswelta Quarters in New York and I'm 0:00:27.640 --> 0:00:29.080 Ed Ludlow in San Francisco. 0:00:29.400 --> 0:00:31.400 This is Bloomberg Technology coming up. 0:00:31.440 --> 0:00:34.480 Yet more earnings courage for you. Ahead will break down 0:00:34.520 --> 0:00:36.720 all you need to know about. Cisco is the largest 0:00:36.720 --> 0:00:39.360 makro of computer networking equipment, and it is tumbling after 0:00:39.360 --> 0:00:39.920 its numbers. 0:00:40.960 --> 0:00:43.239 And we'll have more on Ali Barber's results as the 0:00:43.280 --> 0:00:47.440 e commerce giant falls after abruptly ending a planned spinoff 0:00:47.560 --> 0:00:48.480 of its cloud unit. 0:00:48.560 --> 0:00:50.159 Details ahead class Apex. 0:00:50.200 --> 0:00:53.080 It continues in San Francisco, tex CEO's They Dying with 0:00:53.240 --> 0:00:56.880 China's President will bring you the takeaways from the executive's dinner, 0:00:57.240 --> 0:00:59.560 but first let's check in on these markets. The takeaways 0:00:59.560 --> 0:01:02.160 are what a little bit of moon music shifting In 0:01:02.240 --> 0:01:04.160 terms of the rampant rally, we've seen NASAC off by 0:01:04.160 --> 0:01:05.680 some three tenths of percent on the day. 0:01:05.920 --> 0:01:08.120 We actually had some pretty well. 0:01:08.160 --> 0:01:11.520 Depressing, shall we say, macro economic data. But is that 0:01:11.560 --> 0:01:13.520 good news in terms of whether the federal Reserve will 0:01:13.520 --> 0:01:15.480 go in terms of interest rates, many feeling that the 0:01:15.560 --> 0:01:17.639 jobless claims on the rise, Many feeling that the factory 0:01:17.680 --> 0:01:18.720 output on the downward. 0:01:19.080 --> 0:01:19.720 Well, all of. 0:01:19.680 --> 0:01:21.480 That speaks to the fact that the federal Reserve cannot 0:01:21.520 --> 0:01:23.600 hike yet again, and indeed, maybe we'll see cuts in 0:01:23.600 --> 0:01:25.560 the second half of next year. We therefore see a 0:01:25.560 --> 0:01:27.240 bid coming into the bond market. We're off by some 0:01:27.280 --> 0:01:30.800 six basis points. Looking at Brent crude really down four 0:01:30.840 --> 0:01:33.080 point five percent, let's call it this. As we see 0:01:33.120 --> 0:01:35.039 the inventories build up. That's more of a signal of 0:01:35.040 --> 0:01:38.399 maybe cooling demand. What does that mean about global economic growth? 0:01:38.480 --> 0:01:40.039 Have a look at what's happening in terms of our 0:01:40.120 --> 0:01:42.720 risk asset of choice. I'm looking at bitcoin and still 0:01:42.760 --> 0:01:45.720 we trade within this general thirty six thousand dollars level, 0:01:46.000 --> 0:01:48.080 but we're off by some three percent on the day. 0:01:48.160 --> 0:01:49.720 And what if you've gone in terms of the micro. 0:01:50.280 --> 0:01:52.720 Well, in the context of China, it's both the micro 0:01:52.880 --> 0:01:53.520 and the macro. 0:01:53.720 --> 0:01:55.120 This is shares that Ali Barber. 0:01:55.240 --> 0:01:58.640 The news is that they have decided not to spin 0:01:58.680 --> 0:02:02.120 off their cloud unit. Commentary is that they have been 0:02:02.200 --> 0:02:06.720 impacted by US technology ker export curbs. We're going to 0:02:06.760 --> 0:02:08.919 dig into that later in the program with our reporters 0:02:08.960 --> 0:02:09.440 on both the. 0:02:09.400 --> 0:02:10.640 Macro and micro China. 0:02:10.880 --> 0:02:13.640 For the ADRs of Ali Baba, the US listed shares 0:02:13.880 --> 0:02:16.239 on track for their biggest drop in more than a year. 0:02:16.280 --> 0:02:18.799 We'll get very specific in that later in the show. 0:02:18.840 --> 0:02:21.000 Here in the US, Cisco, that is the name that 0:02:21.040 --> 0:02:23.680 we are looking at. They gave this forecast for the 0:02:23.680 --> 0:02:27.519 fiscal second quarter ending in January that was well below 0:02:27.800 --> 0:02:31.520 street expectations. What Cisco said was, this is not macroeconomic 0:02:31.960 --> 0:02:36.040 pressures or headwinds. They have big enterprise customers working through 0:02:36.080 --> 0:02:39.560 backlogs and networking equipment and that's why they're not ordering. 0:02:39.560 --> 0:02:43.880 But those orders should re accelerate. Do we buy what 0:02:43.960 --> 0:02:45.080 Chuck Robbins is saying? 0:02:45.160 --> 0:02:45.760 Joining us now? 0:02:45.800 --> 0:02:50.000 Pyper Sandler's senior research analyst, Jim Fish neutral rating on 0:02:50.040 --> 0:02:52.920 Cisco fifty dollars price target. I was reading your note and, 0:02:52.960 --> 0:02:54.360 as far as I can tell you, one of the 0:02:54.440 --> 0:02:58.720 few that basically is calling a downturn in this networking 0:02:58.760 --> 0:02:59.520 equipment market. 0:02:59.560 --> 0:03:00.400 What was your takeaway? 0:03:01.600 --> 0:03:04.440 Yeah, Caroline, ed great to chat with you again. It 0:03:04.440 --> 0:03:06.280 feels like it's been only about a month since we 0:03:06.360 --> 0:03:10.080 caught up on Cisco given the splug field. But look, 0:03:10.720 --> 0:03:14.000 I think there's we agreed and we don't agree at 0:03:14.040 --> 0:03:16.760 the same time with what Cisco's saying. Now our checks 0:03:16.880 --> 0:03:20.200 heading into this print and even some of its peers 0:03:20.240 --> 0:03:24.720 on Calendar like Arista and Juniper and F five and 0:03:24.760 --> 0:03:27.280 sort of the networking space overall, we started to see 0:03:27.280 --> 0:03:28.639 a downtick and sort of. 0:03:28.560 --> 0:03:31.360 What enterprises we're looking to order. 0:03:31.600 --> 0:03:34.520 And really the key theme I think for us heading 0:03:34.560 --> 0:03:38.960 into all these prints, including last night, was digestion. 0:03:39.760 --> 0:03:41.480 That's the best word you can use. 0:03:42.240 --> 0:03:46.240 You've had orders from twenty twenty one and twenty twenty 0:03:46.280 --> 0:03:50.880 two pushed into calendar twenty three, and you're just seeing 0:03:50.920 --> 0:03:54.440 that digestion of orders. And meanwhile, when budgets start to 0:03:54.440 --> 0:03:57.680 get tighter, networking tends to be the first thing that 0:03:57.720 --> 0:04:01.480 you try to run, hotter and squeeze as you can 0:04:01.920 --> 0:04:02.600 get away. 0:04:02.360 --> 0:04:04.520 With it for some time. So we're a little bit 0:04:04.560 --> 0:04:05.800 skeptical that we could see. 0:04:05.600 --> 0:04:08.880 At an acceleration again in product orders in their fiscal 0:04:08.920 --> 0:04:11.880 second half, especially when you start to think about budgets 0:04:11.920 --> 0:04:15.200 getting set for calendar twenty four roughly. 0:04:14.920 --> 0:04:17.479 About now with a lot of CIOs and heads of it. 0:04:18.120 --> 0:04:20.120 Jane you mentioned that the last time we were on 0:04:20.160 --> 0:04:23.479 we're talking about the Spunk deal. Does that, therefore thesis 0:04:23.520 --> 0:04:27.520 still make sense, the diversification not just hardware networking gear, 0:04:27.560 --> 0:04:29.880 but getting into the software, getting into sort of longer 0:04:30.000 --> 0:04:31.920 term payments from clients. 0:04:33.040 --> 0:04:34.640 Absolutely, Caroline. 0:04:34.760 --> 0:04:39.000 It's a great part of really why they need systems. 0:04:39.000 --> 0:04:44.480 I'm sorry, why why Cisco needs Splunk. And overall it 0:04:44.560 --> 0:04:47.840 will help with that recurring revenue piece. It'll remove the 0:04:47.920 --> 0:04:51.240 lumpiness of Cisco's current business. But at the end of 0:04:51.279 --> 0:04:54.479 the day, even with Splunk, you're still going to have 0:04:54.600 --> 0:04:58.919 the cyclicality that Cisco has to deal with, given that 0:04:59.000 --> 0:05:02.920 networking piece the biggest part of its business at this point. 0:05:03.400 --> 0:05:04.680 Talk op AI a little bit. 0:05:04.800 --> 0:05:06.680 I mean, they did seem to be saying that the 0:05:06.680 --> 0:05:09.039 appetite is there. They're building what a billion dollars of 0:05:09.160 --> 0:05:11.680 orders that they see in their line of sight. Is 0:05:11.720 --> 0:05:14.720 that enough to offset what we see is basically managed 0:05:14.760 --> 0:05:17.880 decline or managed digestion as you say, for the next 0:05:17.880 --> 0:05:19.680 few quarters. 0:05:20.040 --> 0:05:23.200 Yeah, I mean, it's a nice narrative to have, But 0:05:23.880 --> 0:05:26.600 we did this kind of back to basics piece around networking, 0:05:27.240 --> 0:05:30.000 specifically switching and routing not too long ago. 0:05:30.560 --> 0:05:32.279 And you dive deep into. 0:05:32.080 --> 0:05:36.719 You know where could AI spending on switches be, essentially 0:05:37.600 --> 0:05:40.200 and you see estimates out there calling for about ten 0:05:40.279 --> 0:05:44.080 billion ish and even Chuck mentioned that last night, with 0:05:44.760 --> 0:05:47.480 seventy five percent of it expected to be on Ethernet 0:05:47.520 --> 0:05:50.520 as opposed to Navidio's Infinite Band being the. 0:05:50.480 --> 0:05:52.440 Other roughly twenty five percent. 0:05:53.040 --> 0:05:56.880 But even when you talk about, say ten percent of 0:05:56.920 --> 0:06:02.120 Cisco's switching business a few years from now being AI driven, 0:06:02.240 --> 0:06:05.600 that's a small part of Cisco's networking business. When you're 0:06:05.600 --> 0:06:09.960 talking about a thirty billion dollar plus networking business on 0:06:10.040 --> 0:06:10.560 its own. 0:06:11.400 --> 0:06:15.039 You're talking about wide and wireless whatever, connects, devices, news 0:06:15.120 --> 0:06:17.200 data from a to be. But what jumped at me 0:06:17.240 --> 0:06:20.920 about your note versus others is the end customer we're 0:06:20.920 --> 0:06:26.920 talking about in Cisco's argument, big enterprise customers, right, not SMEs. 0:06:27.080 --> 0:06:29.320 And I kind of think of it like the pandemic. 0:06:29.400 --> 0:06:31.159 Right coming out of the pandemic, we all had an 0:06:31.200 --> 0:06:35.200 excess of hand sanitizer and toilet paper. Bear with me, 0:06:35.640 --> 0:06:37.520 but it seems like a lot of these big enterprise 0:06:37.600 --> 0:06:40.320 companies they just have an excess of the networking and 0:06:40.400 --> 0:06:44.039 routing gear. Do you see that as evidence that that 0:06:44.120 --> 0:06:45.320 Chuck Robbins presented. 0:06:46.320 --> 0:06:49.000 Yeah, no, that's definitely showing up in our customer conversations, 0:06:49.040 --> 0:06:51.200 and as Chuck also pointed out, it's also showing up 0:06:51.240 --> 0:06:55.000 with some of the largest channel partners in those conversations 0:06:55.040 --> 0:06:58.320 as well. So, look, you just have a glut of 0:06:58.520 --> 0:07:01.480 equipment sitting there that needs to be deployed, and I 0:07:01.520 --> 0:07:03.360 don't disagree it's going to take at least a couple 0:07:03.360 --> 0:07:05.920 of quarters. And it's more of the concern for US 0:07:06.000 --> 0:07:09.320 is does this start to stem into the SMB commercial 0:07:09.400 --> 0:07:13.480 base as well, where that can be actually more macro 0:07:13.600 --> 0:07:17.760 sensitive as you think about moving ahead, And it doesn't 0:07:17.800 --> 0:07:20.960 really leave a whole lot of wiggle rooms still when 0:07:21.000 --> 0:07:23.400 you think about roughly thirty percent of their businesses that 0:07:23.440 --> 0:07:26.720 commercial line, and we've already seen struggles on the carrier 0:07:26.840 --> 0:07:29.000 side that started popping up earlier this year. 0:07:29.400 --> 0:07:29.760 Cloud. 0:07:29.760 --> 0:07:32.440 It depends a bit on your exposure to which hyperscaler, 0:07:32.520 --> 0:07:37.840 let's say, but overall, enterprise was essentially that last leg 0:07:37.840 --> 0:07:39.600 of the stool that was holding most of the space 0:07:39.680 --> 0:07:41.880 up and it just now you're starting to see that 0:07:42.000 --> 0:07:47.120 down cycle of networking really come about here. And specifically 0:07:47.160 --> 0:07:49.480 add to your comment, on wireless land. Keep in mind, 0:07:49.520 --> 0:07:51.640 this has been wireless land's been one of the strongest 0:07:51.640 --> 0:07:54.680 part of networking over the last year plus. And what 0:07:54.720 --> 0:07:58.640 we're seeing is it's actually twofold one. You've gotten a 0:07:58.680 --> 0:08:01.880 lot of those access point up it's already and so 0:08:02.080 --> 0:08:05.320 Cisco Morocki for example, has really benefited been growing double 0:08:05.360 --> 0:08:10.280 digits for quite a while here. But secondly, when you 0:08:10.360 --> 0:08:13.840 look at why they needed to upgrade those access points, 0:08:14.120 --> 0:08:16.640 it's because of exactly what I'm sitting on right now 0:08:16.800 --> 0:08:20.680 with Zoom or in other cases Microsoft teams, where that 0:08:20.880 --> 0:08:23.560 sucks up so much bandwidth at all these campuses and 0:08:23.600 --> 0:08:27.040 branches that you needed to upgrade those access points. And 0:08:27.080 --> 0:08:29.720 so now you've kind of gone through that, and those 0:08:29.760 --> 0:08:32.880 applications themselves are trying to reduce down their bandwidth by 0:08:33.320 --> 0:08:36.280 over twenty percent in the latest version, so you just 0:08:36.320 --> 0:08:37.640 haven't slow down in that space. 0:08:37.679 --> 0:08:41.000 In particular, it's why I ask if attentions turned to SMBs, 0:08:41.000 --> 0:08:43.439 because loads of folks use SMBs as their kind of 0:08:43.520 --> 0:08:46.600 lead indicator for the health of an economy in this 0:08:46.720 --> 0:08:49.800 In this context, Jim Fish, Phypisandler seeing a research and 0:08:49.920 --> 0:08:50.960 this greates catch up. 0:09:00.160 --> 0:09:01.640 Rocks by US sanctions. 0:09:01.720 --> 0:09:04.720 Huawei unveiled a new smartphone in August with five G 0:09:04.840 --> 0:09:08.640 capabilities and a cutting edge process or. A teardown of 0:09:08.679 --> 0:09:11.840 the May sixty pro revealed the chip powering the device 0:09:11.960 --> 0:09:16.040 was produced by China's Smick. This raised questions about smick 0:09:16.120 --> 0:09:21.080 we s miic's capabilities and the effectiveness of US LED controls. 0:09:21.160 --> 0:09:21.720 Check this out. 0:09:25.720 --> 0:09:31.280 This at first glance is just a smartphone, but once 0:09:31.320 --> 0:09:34.520 you know what's inside, it becomes clear it's so much 0:09:34.559 --> 0:09:35.000 more than that. 0:09:35.960 --> 0:09:39.880 So what really changed everybody's view of this device was 0:09:40.000 --> 0:09:42.600 what was at the heart of it, the microprocessor that 0:09:42.840 --> 0:09:46.520 was designed and manufactured in China. 0:09:46.840 --> 0:09:49.400 It's at the center of tensions between the world's two 0:09:49.400 --> 0:09:53.360 biggest economies. The phone made by Chinese tech giant Huawei 0:09:53.520 --> 0:09:57.040 represents a breakthrough by Beijing as it tries to escape 0:09:57.080 --> 0:10:00.960 Washington's controls on its access to technology and establish a 0:10:01.000 --> 0:10:06.480 self sufficient chip industry. If those US controls had been successful, 0:10:06.679 --> 0:10:09.840 then a smartphone as advances this simply should not be 0:10:09.920 --> 0:10:12.439 possible without important key components. 0:10:13.400 --> 0:10:19.560 China now is more capable than ever of building advanced technologies. 0:10:19.200 --> 0:10:22.040 And it worried US officials, who are more concerned about 0:10:22.080 --> 0:10:26.760 advance chips going into military equipment than smartphones. It left 0:10:26.760 --> 0:10:30.240 them wondering how exactly did China do It. 0:10:31.840 --> 0:10:34.680 Can catch that full documentary on the Bloomberg and on 0:10:34.720 --> 0:10:39.760 Bloomberg dot Com tonight five pm and indeed tomorrow on YouTube. Meanwhile, 0:10:39.880 --> 0:10:42.360 let's stay with the theme of China shares of Ali 0:10:42.360 --> 0:10:45.160 Baba actually slepping pretty hard after China's largest e commerce 0:10:45.160 --> 0:10:48.480 company called off a spinoff of its giant cloud business. 0:10:48.679 --> 0:10:51.480 But I mean, in fact, the US is tightening chip cubs. 0:10:51.520 --> 0:10:54.080 Of course, all of this links, but please to welcome 0:10:54.080 --> 0:10:56.280 to the show. Henry ren over in London as well, Lee, 0:10:56.320 --> 0:10:58.240 who sat right next to me here and Henry, I 0:10:58.280 --> 0:11:01.160 start with you. It feels as though its first dividend 0:11:01.520 --> 0:11:03.480 just wasn't enough to offset the fact that now that 0:11:03.559 --> 0:11:05.800 some of the parts perhaps don't look quite so valuable. 0:11:07.160 --> 0:11:10.280 Yes, indeed, so it's a double whammy situation for alibah 0:11:10.280 --> 0:11:13.200 Bau this quarter. So its core business of selling goods 0:11:13.600 --> 0:11:18.400 to Chinese consumers is not posting the exciting revenue that 0:11:18.440 --> 0:11:21.439 we've been seeing for last quarter. But more importantly, as 0:11:21.480 --> 0:11:25.400 you line out that the company scrapped its plan to 0:11:26.360 --> 0:11:28.760 spin up its cloud unit, it's that before that it's 0:11:28.800 --> 0:11:32.080 going to relinquish its control of the cloud unit and 0:11:32.160 --> 0:11:34.960 send out the cloud unit as dividend to shareholders, but 0:11:35.120 --> 0:11:38.240 not materializing for now because the company called off the plan, 0:11:38.640 --> 0:11:41.800 although the company did issue a cash dividend, but it's 0:11:42.000 --> 0:11:45.760 seen as just a minor offset to the disappointment because 0:11:45.800 --> 0:11:49.560 investors were really expecting that the company would issue this 0:11:49.880 --> 0:11:53.120 special dividend after the spinoff, and as we know that 0:11:53.160 --> 0:11:56.679 the cloud is the second biggest segment for Ali Baba, 0:11:56.800 --> 0:11:59.880 So it's definitely a day of disappointment, a double whamy 0:12:00.000 --> 0:12:03.520 situation for Ali Baba Shaholders Today team. 0:12:03.840 --> 0:12:06.240 The timing of this is just extraordinary. We're going to 0:12:06.280 --> 0:12:08.760 go to our reporter at APEC later in the show, 0:12:09.480 --> 0:12:13.280 but you know, a centerpiece of what happened last night 0:12:13.480 --> 0:12:16.520 was President g and Biden talking about kind of closer 0:12:16.559 --> 0:12:21.199 economic cooperation while Biden saying we're going to stay competitive, 0:12:22.200 --> 0:12:25.080 is about what are we learning through these earnings out 0:12:25.080 --> 0:12:27.720 of Ali Baba about the health of the Chinese economy 0:12:27.800 --> 0:12:28.200 right now. 0:12:28.520 --> 0:12:30.920 So this definitely doesn't look good because, as Henry said, 0:12:31.000 --> 0:12:33.200 many were really banking on the breakup of the six 0:12:33.280 --> 0:12:36.439 Baby Baba's optimism, we're surrounding it. They were saying that 0:12:36.600 --> 0:12:40.280 Beijing probably has the approve, Beijing probably gave its approval 0:12:40.320 --> 0:12:42.520 signal because this wouldn't happen. That many dubbed it as 0:12:42.520 --> 0:12:45.560 the most radical change in history. And it even looks 0:12:45.600 --> 0:12:48.959 worse because they cited the US restrictions on as one 0:12:48.960 --> 0:12:51.040 of the reasons why they weren't going to continue this. 0:12:51.120 --> 0:12:54.400 And as we know, President Biden and Presidency has met 0:12:54.440 --> 0:12:56.439 their first time in a one year, and that's as 0:12:56.559 --> 0:12:59.320 relations between the two nations are there. I say, at 0:12:59.320 --> 0:13:01.120 the all time look. Oh and while there were no 0:13:01.280 --> 0:13:03.560 really big major headlines, there were small wins, but no 0:13:03.559 --> 0:13:06.480 one was really expecting a major concession. And some analysts 0:13:06.480 --> 0:13:08.760 told me that the fact that this meeting is happening 0:13:09.160 --> 0:13:11.760 is more than enough because the optics is important. But 0:13:11.840 --> 0:13:14.600 to your point, a lot of investors were really disappointed. 0:13:14.600 --> 0:13:17.040 As Henry said, it's a big disappointment for everyone. And 0:13:17.080 --> 0:13:20.120 if you look at Alibaba ADRs, they're now falling to 0:13:20.160 --> 0:13:21.560 the most in more than one year. 0:13:21.679 --> 0:13:24.200 And I think it's notable given that actually we saw 0:13:24.320 --> 0:13:26.760 JD manage to be, we saw ten Cent managed to 0:13:26.800 --> 0:13:30.200 be even with some stiff competition coming from the social 0:13:30.200 --> 0:13:33.400 apps coming in and the smaller businesses as well. Does 0:13:33.480 --> 0:13:36.480 this really reflect a consumer under pressure or. 0:13:36.480 --> 0:13:39.480 Does this also reflect competition. I think it's both, but. 0:13:39.559 --> 0:13:42.000 It's really more of the tepid demand that we're seeing. 0:13:42.120 --> 0:13:45.360 China hasn't seen the big recovery that they were poping 0:13:45.360 --> 0:13:48.240 on and that global investors are really really banking on 0:13:48.480 --> 0:13:50.960 after the COVID pandemic, and you could see that Presidencies 0:13:51.000 --> 0:13:53.600 even trying his best. He visited the Central Bank of 0:13:53.679 --> 0:13:55.600 China just a few weeks back to show that, you know, 0:13:55.760 --> 0:13:58.200 he's on top of this, but so far, and we 0:13:58.240 --> 0:14:01.400 also have foreign investments in China, but they're really all 0:14:01.440 --> 0:14:04.480 time low. So it's really kind of a complex picture. 0:14:04.520 --> 0:14:07.240 But it's really not a monolith. As you said, ten 0:14:07.320 --> 0:14:09.280 Cent is doing well, JD is doing well at least 0:14:09.559 --> 0:14:12.520 based on last month, but so far, for now, optimism 0:14:12.600 --> 0:14:14.520 is still not evident in Chinese. 0:14:14.240 --> 0:14:19.800 Investors always think about Ali Barbars like analogous with Amazon. Right, 0:14:19.800 --> 0:14:22.720 you got your e commerce component and then the news 0:14:22.720 --> 0:14:25.760 today being the cloud component, and Henry you were writing 0:14:26.200 --> 0:14:29.360 this morning's street rap. Vali Barber, what's the kind of 0:14:29.440 --> 0:14:33.560 cell side specific takeaway? From the numbers, but also the 0:14:33.600 --> 0:14:34.640 different parts of the bids. 0:14:35.080 --> 0:14:38.360 Yeah, so from the numbers perspective, the e commerce part 0:14:38.400 --> 0:14:41.560 of the business is still occupying more than fifty percent 0:14:41.600 --> 0:14:43.720 of Ali Baba's core revenue. 0:14:43.760 --> 0:14:46.120 However that part is slowing. 0:14:46.160 --> 0:14:49.040 So we saw some revival trends in the last quarter, 0:14:49.320 --> 0:14:53.200 which shows that Alibaba might be again its momentum again 0:14:53.440 --> 0:14:56.200 when its competitors like pindle Do or the price aggressor 0:14:56.400 --> 0:14:59.120 as well as live streaming e commerce platforms like going 0:14:59.360 --> 0:15:02.360 like quite a show, or like entering the space and 0:15:02.480 --> 0:15:05.960 grabbing the market share. But it's not it's not happening 0:15:06.000 --> 0:15:08.800 once again this quarter because the sales has been a 0:15:08.800 --> 0:15:12.960 bit disappointing and for analysts it's a disappointment. And on 0:15:13.000 --> 0:15:15.880 the other hand, as we said, it's now scrapping it's 0:15:15.920 --> 0:15:18.720 planned to spin off the cloud unit. It's also scrapping 0:15:18.720 --> 0:15:21.520 its plan to IPO, it's. 0:15:21.640 --> 0:15:23.920 Freshupul, which is a grocery shipping chain. 0:15:24.080 --> 0:15:27.080 It's another disappointment for analysts as FOP so a lot 0:15:27.120 --> 0:15:28.080 of things to digest. 0:15:28.120 --> 0:15:30.120 FULI Barbi inverstrously. 0:15:29.800 --> 0:15:32.600 And as we pointed out, that disappointment reflected in shares. 0:15:32.680 --> 0:15:35.760 The ADRs down nine percent biggest dropping more than a year, 0:15:36.000 --> 0:15:37.920 and the stock trading at its lowest level since May. 0:15:37.960 --> 0:15:41.680 Bloomberg's Henry Ren and Isabel Lee the dream team back together. 0:15:41.800 --> 0:15:43.120 Thank you now coming up. 0:15:43.200 --> 0:15:47.240 APEC continues here in San Francisco as China's president dines 0:15:47.320 --> 0:15:50.160 with the CEOs of some pretty major firms. We're gonna 0:15:50.160 --> 0:16:16.040 bring you all those details next. This is Bloomberg Technology. Okay, 0:16:16.040 --> 0:16:18.280 time for talking tech and first up. Shares of Hello 0:16:18.480 --> 0:16:22.840 Fresh falling today after the mailkit delivery company shocked investors 0:16:23.080 --> 0:16:25.520 by cutting its twenty twenty three e bit dar Guide 0:16:25.520 --> 0:16:28.160 and HelloFresh was down as much as a record twenty 0:16:28.200 --> 0:16:31.800 four percent eraising nearly seven hundred and eighty million dollars 0:16:31.800 --> 0:16:34.400 of market value. The changes to it outlook come just 0:16:34.480 --> 0:16:38.960 three weeks after it reaffirmed its targets, and Lenovo says 0:16:38.960 --> 0:16:41.800 it expects to see revenue growth this quarter generated from 0:16:41.880 --> 0:16:45.640 personal computer demand in China that the world's largest PC 0:16:45.800 --> 0:16:48.400 maker says it's investing a lot of money into AI 0:16:48.560 --> 0:16:52.600 optimized devices, something that CEO says could drive another round 0:16:52.720 --> 0:16:57.160 of PC replacement. Plus, semiconductor firm Sapien is unveiling its 0:16:57.240 --> 0:17:00.960 latest artificial intelligence chip for Data cent. It's the startup 0:17:01.240 --> 0:17:04.679 backs by South Korean firm sk Group is ramping up 0:17:04.680 --> 0:17:06.040 its offering to compete with. 0:17:06.040 --> 0:17:07.639 The likes of Nvidia and others. 0:17:07.680 --> 0:17:11.199 Sapient will be conducting testing for major customers before it 0:17:11.240 --> 0:17:14.080 begins mass production in the first half of next year. 0:17:14.280 --> 0:17:17.120 Carrot, Well, let's turn attention to what's happening in your 0:17:17.119 --> 0:17:17.800 city at the moment. 0:17:17.920 --> 0:17:18.000 Ed. 0:17:18.040 --> 0:17:21.320 Of course, APEC underwearing way in San Francisco, and Arey 0:17:21.359 --> 0:17:24.040 Horden has been there throughout talking to some big names 0:17:24.040 --> 0:17:26.520 and attendance, and notably there were some big executives and 0:17:26.560 --> 0:17:30.520 attendants at a dinner with Jijingping last night. It's notable 0:17:30.520 --> 0:17:32.520 we've got some reporting at the moment saying that Tesla 0:17:32.560 --> 0:17:34.560 CEO in a Musk is no longer actually going to 0:17:34.560 --> 0:17:38.840 be in today's lineup of speakers at APEX. That's largely 0:17:38.880 --> 0:17:41.240 because he endorsed an anti Semitic post on X his 0:17:41.280 --> 0:17:43.639 own social media site. We'll talk about that later about Marie. 0:17:43.640 --> 0:17:46.520 But who have we seen and why have we seen 0:17:46.560 --> 0:17:48.480 these certain executives with Shijingping. 0:17:48.960 --> 0:17:50.960 Well, I have a full list of who sat at 0:17:50.960 --> 0:17:54.919 Shijingping's table last night where you saw a number of 0:17:54.960 --> 0:17:58.040 ceo stand up and applaud him, the likes of Ray Dalio, 0:17:58.240 --> 0:18:01.160 Larry Fink, Tim Kirk, all of them. You see them 0:18:01.160 --> 0:18:04.720 on the screen there in attendance to meet with Shijingping 0:18:04.880 --> 0:18:10.199 where one Republican official, Mike Gallagher Wisconsin, who chairs the 0:18:10.400 --> 0:18:13.480 China House Select Committee, said when he was at a 0:18:13.520 --> 0:18:17.000 protest against the Chinese Communist Party this weekend, said that 0:18:17.040 --> 0:18:19.840 executives were paying as much as forty thousand dollars or 0:18:19.840 --> 0:18:22.200 a company paying as much as forty thousand dollars for 0:18:22.640 --> 0:18:25.359 their CEO to be able to go to this dinner 0:18:25.400 --> 0:18:28.960 and sit with the President of China. But I think 0:18:28.960 --> 0:18:31.199 more importantly we should also look at what the President 0:18:31.240 --> 0:18:34.920 of China said yesterday. He really struck a more conciliatory, 0:18:35.000 --> 0:18:38.480 duvish tone. Part of this was the fact that he 0:18:38.600 --> 0:18:41.720 is dealing with a fragile economy at home. We've seen 0:18:42.160 --> 0:18:45.320 a huge hit to foreign direct investment into China, and 0:18:45.400 --> 0:18:47.480 it looked like he was trying to set a path 0:18:47.520 --> 0:18:50.160 forward to be more welcoming when it comes to US 0:18:50.240 --> 0:18:53.840 businesses this summer. Gina Ramundo, the Commerce Secretary, when she 0:18:53.960 --> 0:18:58.520 was in China, said that she told Chinese leaders that 0:18:58.640 --> 0:19:00.919 what she hears time and time again from businesses, and 0:19:00.960 --> 0:19:03.040 that China is becoming more uninvestable. 0:19:03.240 --> 0:19:04.720 So Shijingping yesterday. 0:19:04.480 --> 0:19:06.960 Said that he has no plans to unseat the United States, 0:19:07.000 --> 0:19:09.120 and he'd also said that he doesn't want to see 0:19:09.200 --> 0:19:11.359 China in a hot or cold war. 0:19:11.440 --> 0:19:12.600 Now, it remains to be seen. 0:19:12.440 --> 0:19:15.119 If this is going to assuage some of these business concerns. 0:19:15.920 --> 0:19:18.560 So I imaged on the other side of the table 0:19:18.600 --> 0:19:23.000 and the negotiation, President Biden was asked a very specific 0:19:23.080 --> 0:19:26.359 question about whether he viewed Jijiping as a dictator. 0:19:27.080 --> 0:19:30.560 What was his response, Well, Biden has said it before, 0:19:30.720 --> 0:19:33.120 he said it yesterday, and he will probably say it again, 0:19:33.240 --> 0:19:35.640 especially as we get into the November twenty twenty four 0:19:35.680 --> 0:19:39.080 presidential election. He said, Shijingping is a dictator, and then 0:19:39.080 --> 0:19:41.280 he explained it's a very different system in China than 0:19:41.320 --> 0:19:42.760 the one we have here at. 0:19:42.680 --> 0:19:43.479 The United States. 0:19:44.320 --> 0:19:47.760 This comment, though, came after Biden fielded a number of 0:19:47.880 --> 0:19:49.800 questions in the press conference, and then he took some 0:19:49.840 --> 0:19:53.160 ad hoc questions as he was leaving that press conference. 0:19:53.359 --> 0:19:56.159 I think the main takeaway from the White House is 0:19:56.359 --> 0:19:59.240 Biden's k not going to back away. Have asked this again, 0:20:00.200 --> 0:20:03.080 especially as the rhetoric gets heated before November of twenty 0:20:03.119 --> 0:20:04.760 twenty four. But the main takeway from the White House 0:20:04.800 --> 0:20:07.400 is they feel that this was a way a deliverable. 0:20:07.560 --> 0:20:10.720 These two individuals met, and Biden really just wants to 0:20:10.720 --> 0:20:12.640 get the relationship in a better place where he can 0:20:12.680 --> 0:20:14.360 pick up the phone in a time of conflict. 0:20:15.359 --> 0:20:17.680 AMH, real quick? What's left to come on the agenda? 0:20:17.800 --> 0:20:19.960 While Biden's in town well waiting. 0:20:19.720 --> 0:20:21.960 To hear from Biden, he's going to be addressing apex 0:20:22.000 --> 0:20:25.280 CEO's there'll be a family photo and then this evening 0:20:25.359 --> 0:20:26.960 he's going to be looking a little bit more forward 0:20:27.000 --> 0:20:32.320 to the iPath, which is this water down trade deal, 0:20:32.520 --> 0:20:37.159 not the DPP but iPath, the Indo Pacific Economic Framework. 0:20:37.280 --> 0:20:39.880 One thing to note about this is potentially some pushback 0:20:39.920 --> 0:20:42.119